New models and economic incentives for circular economy business
The circular economy holds high potential to contribute to sustainable economic growth and resource efficiency. To capitalise on this potential, appropriate business models are required that can respond to the specific characteristics of the circular economy, in particular in terms of altering value chains, consumption patterns, producer-consumer relationships and financing needs. Furthermore, these business models need to address the issues of trust and traceability. This includes ensuring environmentally, economically and ethically secure sources of materials as well as ensuring that incentives are appropriately distributed throughout the entire supply chain.
Circular economy business models and improved knowledge thereof need to be developed and disseminated to enable entrepreneurs, industries, and business sectors to work together effectively and to make the transition towards the circular economy. In order to make this transition permanent and sustainable, it is of great importance to integrate public policy-making and business decision-making into the development and analysis of best practices, and their subsequent uptake and scaling-up of circular economy business models.
Proposals should establish the baseline and facilitate better understanding of the relevant factors which stimulate or hinder successful implementation of circular economy business models. In addition, the underpinning economics leading to further development and future implementation of business models that facilitate the transition towards a circular economy, should be investigated together with the potential of these business models to achieve wider social sustainability benefits, including job creation potential, especially in SMEs. These activities should be based on the identification of drivers and barriers through existing initiatives, programmes, or concrete cases of already successfully applied circular economy business models or selected sectors which have high potential for a transition to the circular economy. All relevant actors and entire chains of production and use should be taken into account. The selected concrete cases or sectors should be sufficient in number to derive generic recommendations at EU level and relevant to support Europe's re-industrialisation, and the Commission’s initiatives in the field of Industry 2020, Internet of Things, the Digital Single Market and Resource Efficiency. Recommendations should be provided in support of policy making, and for future implementation or replication of developed circular economy business models.
Smart, data-driven ICT environments that can contribute to enabling a new generation of business models that maximise performance and added value to the customer, could be also considered, for example sharing, leasing, remanufacturing and new forms of cooperative or social enterprises.
The project activities should aim to attract interest from public and private organisations; the engagement of policy and decision makers should be envisaged; the involvement of scientific actors and business- and higher economic education schools is encouraged in the selection and analysis of cases. Projects should provide an effective mechanism to promote and pave the way for enabling education about and in support of and implementation of business models for the circular economy in a consistent and sustainable manner.
Proposals should consider a systemic approach in business models, applying economic, technological, social, financial, governance, Corporate Social Responsibility and regulatory innovation and embed a strong focus on design, interaction and distribution of value across all actors in a value chain and/or value network.
The activities should take into account and liaise with, where appropriate, other EU past and present projects and initiatives in the field such as the research and education programs of the relevant Knowledge and Innovation Communities (KICs) of the European Institute for Innovation & Technology (EIT) – namely the Climate-KIC, the EIT Raw Materials and the upcoming KIC on Added-value manufacturing (to be launched in 2016).
The Commission considers that proposals requesting a contribution from the EU in the range EUR 3 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.
The project results are expected to contribute to:
- recognition by industry and policy makers of the role that business models can play in the circular economy;
- establishing a practice of co-design and replication of new circular economy business models, linking business development and policy making, based on the trans-disciplinary research outcomes on drivers and barriers also in sectors not yet engaged in the circular economy;
- better application and replication of applied research and innovation outcomes through enhanced exchange of information, experience, and best practice on circular economy business models and policy making in support thereof between policy makers, businesses, academics, business and higher economic education schools, practitioners, and regional development organisations;
- enabling circular businesses to overcome barriers originating from dominant market structures of the linear economy, and reinforcing the shift in consumption, production and value chain operation with effective cooperation mechanisms;
- Europe's sustainable transition towards a circular economy;
- increased dissemination among relevant communities of circular economy-related best practices in business development, financial instruments, scaling up activities and policy making.